"Meanwhile, Here Are 20 Signs That China Is Cornering The Global Oil Market

Gus Lubin and Gregory White | May 28, 2010, 9:54 AM

Image: The Globe And Mail

In response to the BP's Deepwater Horizon disaster, President Obama has launched a 6 month moratorium on new deepwater exploration contracts and other oil drilling restrictions.

But China isn't stopping.

Just this month, state-owned Chinese companies have signed contracts worth over $50 billion in Canada, Brazil, Argentina, Iraq, Venezuela, and Nigeria.

Most deal include an export clause, locking down energy supplies for the growing Chinese economy. If America's demand ever increases, these deals would present a serious problem.

And Beijing has no qualms about offshore drilling."

$1.3 billion to buy 45% percent of an Alberta projectDeal signed May 2010: China Investment Corp. paid $817 million to take a 45% share of a Penn West Energy Trust project, worth up to 50,000 barrels per day. They also paid $435 million for a 5% stake of Penn West, according to Globe And Mail.

Background: Canada has the world's second largest oil reserves, with relatively minuscule production. It needs foreign capital to fund major new developments in the Alberta Oil Sands, which include shale oil projects.

$1.9 billion to buy 60% of more Alberta projectsDeal signed August 2009: Petrochina paid $1.9 billion for a 60% stake in two properties held by Athabasca Oil Sands Corp, according to Globe And Mail.

Background: Canada has the world's second largest oil reserves, with relatively minuscule production. It needs foreign capital to fund major new developments in the Alberta Oil Sands, which include shale oil projects.

$3 billion to secure a long term oil shipments from Angola to ChinaDeal signed 2006: Chinese state owned Eximbank provided a loan $3 billion to Angola, and agreed to receive a steady flow of oil from the country in return.

Background: Because of the flow of Chinese funding into the country, Angola has doubled government spending to $25 billion and has been able to fore go IMF support.

$3 billion to develop a Turkmenistan gas fieldDeal completed June 2009: China loaned Turkmenistan $3 billion to develop its South Yolotan natural gas field, with various export guarantees. In a separate deal, Turkmenistan opened a new gas pipeline between themselves and China, which will deliver 40 billion cubic meters of gas per year by 2013.

Background: This amount is now more than half of China's yearly demand, which is only set to rise. China is now the key buyer in the region, rather than Russia.

$3 billion investment in an offshore Brazilian oil fieldDeal signed May 2010: Chinese state company Sinochem is buying 40% of the offshore Peregrino oil field for $3.07 billion. Statoil, the Brazilian energy company, will be beneficiary of the 40% purchase.

Background: Statoil is set to see a large cut in the oil it bring to market in the future for this up front fee. The field is set to start producing results by 2011.

$3 billion for a 40% percent stake in an Argentine oil companyDeal completed May 2010: China National Offshore Oil Corp will pay $3 billion to buy Argentina's Bridas Group, giving it a 40 percent stake in Pan American Energy LLC, according to Business Week.

Background: China's new company owns 23 oil and gas production blocks in Argentina and Bolivia, and it may claim more through off-shore exploration. Argentina has failed to explore much of its long coastline and has relatively low production, according to NYT.

$4.65 billion to buy 9% of a major Alberta projectDeal signed April 2010: Sinopec paid $4.65 billion for a 9 percent stake in Syncrude Canada, according to Globe And Mail.

Background: Syncrude is the world's largest producer crude from oil sands, and positioned to lead development of the Canada's Oil Sands.

$4.9 billion to buy a Kazakh oil company and build a pipeline back to ChinaDeal signed in 2005: China National Petroleum Corp. purchased the oil company Petrokazakhstan for $4.18 billion, but didn't stop there. The Chinese then built a $700 million oil pipeline to carry the product from Kazakhstan to China.

Background: The deal hasn't been so clear cut in the end for China, as they were forced to sell back a third of the project to the Kazak government. China has continued to invest in Kazakhstan, however, and also purchased Nations Energy for $1.9 billion in 2006.

$10 billion to fund offshore exploration in BrazilDeal signed February 2009: China Development Bank loaned $10 billion to Petrobras to fund exploration. In related deals, Petrobras guaranteed to export over 200,000 barrels each day to China.

Background: The deal furthers relations between Brazil and its biggest trade partner. It may pay off this year as Petrobras considers selling offshore blocks to Sinopec for cash.

Brazil has the 15th-largest oil reserves in the world. The recently discovered Tupi field could boost reserves much higher.

$15 billion to improve Iraq's Rumaila oil field (plus a drilling contract)Deal signed October 2009: China National Petroleum Corp partnered with BP to drill Iraq's mega Rumaila field. They will charge $2 per barrel to produce 100,000 barrels a day. CNPC will also pay $15 billion in infrastructure improvements, according to Arabian Business.

Background: China ar greed to write off Iraq's Saddam Hussein era debts by 80% earlier this year in an effort to smooth ties between the two countries. Now China is snapping up tons of Iraqi fields. Protecting the Rumaila field was the purported reason for Saddam's Hussein's attack on Kuwait in the first Gulf War.

Majority ownership in a dirt-cheap contract to drill Iraq's Halfaya oil fieldDeal signed January 2010: PetroChina announced a 37.5% stake in a development of Iraq's Halfaya oil field. The oil field holds reserves of around 4.1 billion barrels, which PetroChina will produce at a cost of less than $1.75 per barrel.

Background: China ar greed to write off Iraq's Saddam Hussein era debts by 80% earlier this year in an effort to smooth ties between the two countries. Now China is snapping up tons of Iraqi fields.

Majority ownership in a contract to drill Iraq's lucrative Missan fieldDeal signed May 2010: China National Offshore Oil Corp partnered with a Turkish company to develop Iraq's Missan field for 20 years. The syndicate beat all contenders with a bid to produce at $2.30 per barrel.

Background: China agreed to write off Iraq's Saddam Hussein era debts by 80% earlier this year in an effort to smooth ties between the two countries. Now China is snapping up tons of Iraqi fields.

A $20 billion investment into the Sudanese oil industryDeals signed over the last decade: China's investment in Sudanese oil is not very public, considering the nature of Sudan's government. Some reports have total Chinese investment at $20 billion, and that doesn't even include the shipment of arms to the country.

Background: China's relationship with Sudan is often criticized due to the violent nature of the regime, and the Darfur conflict.

$20 billion to develop the Orinoco Belt in VenezuelaDeal signed May 2010: China National Petroleum Corporation loaned $20 billion to PDVSA for development that will yield nearly three billion barrels of oil. PDVSA will repay the loan with oil.

In a side deal, China agreed to build three thermal power plants, according to The National.

Background: Venezuela has the 6th-largest oil reserves and relatively low production. The notoriously-inefficient state-owned industry is becoming more open to international investment.

$23 billion to build three refineries in NigeriaDeal signed May 2010: China State Construction Engineering Corporation will pay $23 billion to fund refineries that can produce 750,000 barrels per day.

Background: The real payoff to this deal comes later in the year when Nigeria auctions drilling contracts on offshore fields. The government will only give contracts to parties that invest in local infrastructure and economy, according to WSJ.

$25 billion to transport oil from Siberia to ChinaDeal signed February 2009: China has provided a $25 billion loan to Rosneft and Transneft, two Russian oil transport and pipeline companies. This loan is to provide the shipment of oil over a 20 year period from Russia to China.

Background: The oil is being shipped from the East Siberian oil fields of Russia, and will amount to an estimated 241,000 barrels a day. It is a move to reduce China's dependence on Middle East oil and expand their regional activities.

$25 billion to fund two major Russian oil companiesDeal signed February 2009: China boosted its Russian oil investments by lending $25 billion to two Russian oil giants, Rosneft and Transneft, with the result being 15 million metric tons going to China a year.

Background: The deal represents 10% of China's yearly oil imports in 2009 numbers. A new pipeline between the two countries is set to begin operation before the year's end.

$41 billion to produce LNG off the coast of AustraliaDeal signed August 2009: China National Offshore Oil Corp. paid $41 billion for rights on liquefied natural gas from Queensland, Australia for the next 20 years. The deal will result in 3.6 million metric tons of LNG being transported to China every year.

Background: The deal was hailed as the largest trade deal in Australian history. The resource-rich country is eager to increase trade with China, even as the Chinese controversially jailed Australian employees of Rio Tinto.

Over $70 billion in natural gas and oil investments in IranDeal signed October 2004: Sinopec, the Chinese state oil company, signed a $70 billion deal with Iran for liquefied natural gas. The deal sees 250 million tons of LNG head to China over 30 years for the development of the Yadavaran area.

Background: China continues to pursue oil and gas deals with Iran, with the U.S. government increasingly upset over these actions. As of 2009, China was considering another $43 billion in investment in the country.

The Investments in Iran, will they yield anything? I mean the Chinese are now in tandem with US to apply more sanctions, are the Chinese shooting themselves in the foot, by compromising their own Oil Security? Or have they got confirmation from US that they will get Oil from elsewhere to satiate their demand?

The Investments in Iran, will they yield anything? I mean the Chinese are now in tandem with US to apply more sanctions, are the Chinese shooting themselves in the foot, by compromising their own Oil Security? Or have they got confirmation from US that they will get Oil from elsewhere to satiate their demand?

Click to expand...

To my knowledge, any U.S.-proposed U.N. sanction that affects China's investment or involvement in the Iranian oil sector is a non-starter (e.g. China, as a permanent veto-wielding member of the United Nations Security Council, will veto the proposal). It would be extremely unfair to deprive Iran of its major hard-currency earner, important civilian high-paying jobs, and starve the Iranian population.

"From Times Online
May 3, 2010Sanctions on Iran have failed. The US must target its oil
No country has yet tried to hit at the heart of the Iranian economy

Bronwen Maddox

When Mahmoud Ahmadinejad walks up to the podium today in New York to deliver another blast of venom, the only proper response is for the US to hit Iranâ€™s economy with much tougher sanctions than anyone has yet tried. That means targeting its oil industry, not just its leaders and its banks.

Otherwise, Iranâ€™s President will deliver real injury, not just insult, to this crucial conference on the Nuclear Non-Proliferation Treaty (NPT). He has taken Iran to the brink of having nuclear weapons, and if it does soon get them (despite protestations that it only wants nuclear power), that will trigger a Middle East arms race."

Almost 200 officials from the Obama Administration, some of those being Hillary Clinton and Timothy Geithner, will be heading to Beijing next week for a talks on trade and the yuan. However, no doubt the current issues with North Korea and Iran will be on the table.

Chinaâ€™s involvement with North Korea has certainly been an interest of late. Washington has long urged Beijing to do more to press these countries to curb their nuclear ambitions. South Korea's official finding that a North Korean torpedo sank its warship, the Cheonan, in late March killing 46 sailors will add to U.S. demands on China, the North's sole major backer.

Kim Jong-il visited Beijing this month and China will keep all statements about its dealings with North Korea to a minimum, but another concern will be Tehran. China has recently agreed to sanctions concerning Iran, but on the economic front, China's biggest oil company is pressing ahead with oil-and-gas projects in Iran valued at billions of dollars, highlighting Beijing's strong economic ties to Tehran.

Faced at home with both declining oil production and rising demand, China has been importing more oil from countries like Iran. China believes stability in the Middle East is good for energy security, but it doesn't want sanctions to cut off its supply of Iranian crude, which could have forced it to buy more oil elsewhere with the possible effect of driving up global prices."

New Delhi, Aug 19 (IANS) Indiaâ€™s Petronet LNG has signed a $20.5-billion gas purchasing agreement with Australiaâ€™s ExxonMobil, the first long-term gas contract between the two countries.
According to the agreement, signed Aug 10 in Perth, ExxonMobil will sell around 1.5 million tonnes of liquefied natural gas (LNG) annually from the Gorgon project in western Australia to Petoronet for 20 years.

In a big-ticket investment aimed at giving a boost to its holding of oil and gas assets abroad, the Oil and Natural Gas Corporation Videsh Limited (OVL), along with its partners, entered into an agreement with the Venezuelan government on Thursday to develop a $20-billion oil project in that country.
The project is expected to give India 3.6 million tonnes of crude a year.

At home, moreover, India forged deals five years ago that are now coming to fruition.

The United Kingdomâ€™s Cairn Energy PLC scored an oil discovery in 2004 that is now under production at the rate of 180,000 barrels a day and will reduce Indiaâ€™s oil imports, Somers said. He said production began this year.

Reliance Industries Ltd., an Indian company, also found at least 30 trillion cubic feet of â€œproven, probable gas reservesâ€ on the subcontinent and began producing this year, he added. In another 18 months, the â€œgame-changer discoveryâ€ will start generating electricity and alter the countryâ€™s economy, he said.

He said India had been greatly encouraged by the state-owned energy companyâ€™s overseas expansion, particularly in Russia, which accounts for about 20 per cent of revenues.
ONGC took a 20 per cent stake in the Sakhalin 1 project and bought Imperial Energy, a London-listed company most of whose assets were in Russia, for $2.1bn last year.
â€œThe other advantage for India is that, by having equity in many of the Russian projects, India will be able to offset part of the price shocks.â€

"The US has been pressuring large oil companies such as Franceâ€™s Total, and Royal Dutch Shell to cease business with Iran." Every time that a large Western oil company pulls out of an important Iranian oil or gas project, China is ready to take their place.

Iranian Ministry of Oil announced that the French Company, Total will not be involved in the development of phase 11 of South Pars, the worldâ€™s largest gas field.

Earlier Totalâ€™s spokesman had announced that they have resumed negotiations on the developments. The earlier phases of the project were handled by Franceâ€™s Total, the Malaysian Company, Petronas, and the National Iranian Oil Company.

Reportedly the project has been handed over to the Chinese company, CNPC.

The US has been pressuring large oil companies such as Franceâ€™s Total, and Royal Dutch Shell to cease business with Iran.

The US has assumed sanctions against companies that negotiate with Iran citing it a policy for stopping Iranâ€™s nuclear activities.

The Sevan Driller, the worldÂ´s first cylinder-shaped deep sea water crude oil rig and bulky storage platform, which is constructed by the Nantong Shipyard under China Ocean Shipping (Group) Company (COSCO), is unveiled during a launching ceremony in Nantong City, east ChinaÂ´s Jiangsu Province, June 28, 2009. The rig boasts a capacity of drilling of wells up to 40,000 feet in water depths of up to 12,500 feet, a variable deckload of more than 15,000 metric tons and high storage capacity of bulk materials."

Xin Pu Yang, the most sophisticated supertanker ever designed and built by a Chinese shipyard, docks at Guangzhou, South China's Guangdong province, January 22, 2010. The ship was delivered to its buyer China Shipping(Croup) Company on Friday at Nansha port in Guangzhou. It marks a milestone that the tonnage of China's oil tanks finally breaks through 300,000 tons. [Photo/Xinhua]"

A photo taken on January 22, 2010 shows the cockpit of Xin Pu Yang, the most sophisticated supertanker ever designed and built by a Chinese shipyard at Nansha port, Guangzhou, south China's Guangdong province.
[Photo/Xinhua]

It is no secret that some OPEC nations have been pumping crude above their quotas.

What is more mysterious in an oversupplied oil market is where in the world those unsanctioned barrels have ended up.

In the case of Iranâ€™s estimated 400,000 barrels per day (bpd) of excess output, the answer could lie, at least partly, in China. The worldâ€™s third-biggest energy consumer has been stockpiling crude for the past 18 months in response to a government programme to establish strategic petroleum reserves equal to 90 days of consumption.

It continues to do so as Beijing builds more storage to reach a 2020 target of more than 475 million cubic feet of state-controlled capacity.

In the other direction, Chinaâ€™s state-controlled oil companies may be planning to increase their supply of refined fuels to Iran as the traditional western suppliers have yielded to diplomatic pressure from their governments to discontinue business ties with Iran.

Chinese enterprises have signed agreements to develop three of Iranâ€™s biggest untapped oilfields. The unwritten side deal is for many barrels of current and future Iranian crude production to flow to Beijing in return for a smaller supply of fuel from Chinese refineries.
While its oil exports to the West have shrunk, Iran strengthened its crude flow to China by about a third between 2007 and last year, to 544,000 bpd from 411,000 bpd.
China is Tehranâ€™s second-biggest customer for crude after Japan. Iran is Beijingâ€™s second-biggest crude supplier, behind Saudi Arabia. It supplied about 15 per cent of Chinese oil imports last year.

Beijing looks to Iran as â€œa major source of future oil suppliesâ€, and that is not likely to change, said James Placke, a senior associate at IHS Cambridge Energy Research Associates. â€œTheyâ€™d have to go through a substantial policy reversal and Iâ€™d be surprised if they did that.â€

That does not bode well for the success of Washingtonâ€™s plan to toughen sanctions against Tehran by cutting off petrol supplies and urging others to do the same. To work, that strategy would require a UN Security Council resolution, which China would be unlikely to support.
Washington is understood to have asked its allies in the Middle East, including Saudi Arabia and the UAE, to supply more crude to China in order to lessen Beijingâ€™s dependence on Iranian oil.

Saudi Arabia in particular, has been happy to oblige. Its national oil company Saudi Aramco is in a joint venture to build a large refinery in Chinaâ€™s Fujian province, configured to process Saudi crude.

But Beijing will need more oil than even the Saudis can supply because the economy is growing at least 8 per cent despite the global downturn.

India, which supplies the most petrol to Iran, is also unlikely to comply with the US call for tougher sanctions.

Like China, Asiaâ€™s second-most populous nation is also a significant importer of Iranian crude and is looking at future gas supplies from Iran.

China is not solely relying on Tehran to quench its oil thirst. It is also pursuing risky new oil production ventures in countries such as Iraq and Uganda.

In Iraq, which has the worldâ€™s biggest potential for expanding crude output, China has paid US$296 million in signing fees for oil development projects giving it access to roughly 24 billion barrels of reserves, MEED, the Middle Eastern business intelligence newsletter, reported this week.

That makes China the biggest foreign investor in Iraqâ€™s oil sector behind the US, which, according to MEED, had committed $577 million ((Dh2.11 billion) in signing fees to control about 12 billion barrels of reserves.

Iranian rather than American influence now carries more weight with policymakers in Baghdad, which means the outlook for the Iranian and Iraqi oil sectors are linked.

Tehran does not want to see its share of the global oil market eroded by its neighbour, while Washington is expected to assist Iraq with ambitious plans to boost crude exports.

But Iranâ€™s influence over Baghdad may wane as Iraqi political alliances shift after the countryâ€™s national election earlier this month. In order for Iraq to form its next government, power-sharing deals to include groups wary of Tehran seem increasingly likely.

Ironically, this may be one of the few factors working in Washingtonâ€™s favour as it seeks to tighten the screws on Tehran.

Trial operation showed the remote control machine, produced by Xi'an Coal Mining Machine Co. Ltd, can mine eight million tons of coal annually, according to the Shaanxi Provincial Science and Technology Department.

The price for each was 16 million yuan (2.3 million U.S. dollars), more than 40 percent lower than [imported] ones.

China's coal production doubled in the recent decade and reached 2.5 billion tons last year. But it can only produce coal mining machine with power capacity below 1,800 kw. Machines above 2,000-kw were [imported] from the U.S. and Germany."

TIANJIN, China â€” Chinaâ€™s frenetic construction of coal-fired power plants has raised worries around the world about the effect on climate change. China now uses more coal than the United States, Europe and Japan combined, making it the worldâ€™s largest emitter of gases that are warming the planet.

But largely missing in the hand-wringing is this: China has emerged in the past two years as the worldâ€™s leading builder of more efficient, less polluting coal power plants, mastering the technology and driving down the cost.

While the United States is still debating whether to build a more efficient kind of coal-fired power plant that uses extremely hot steam, China has begun building such plants at a rate of one a month.

Construction has stalled in the United States on a new generation of low-pollution power plants that turn coal into a gas before burning it, although Energy Secretary Steven Chu said Thursday that the Obama administration might revive one power plant of this type. But China has already approved equipment purchases for just such a power plant, to be assembled soon in a muddy field here in Tianjin.

â€œThe steps theyâ€™ve taken are probably as fast and as serious as anywhere in power-generation history,â€ said Hal Harvey, president of ClimateWorks, a group in San Francisco that helps finance projects to limit global warming.

Western countries continue to rely heavily on coal-fired power plants built decades ago with outdated, inefficient technology that burn a lot of coal and emit considerable amounts of carbon dioxide. China has begun requiring power companies to retire an older, more polluting power plant for each new one they build.

Cao Peixi, the president of the China Huaneng Group, the countryâ€™s biggest state-owned electric utility and the majority partner in the joint venture building the Tianjin plant, said his company was committed to the project even though it would cost more than conventional plants.

â€œWe shouldnâ€™t look at this project from a purely financial perspective,â€ he said. â€œIt represents the future.â€

Without doubt, Chinaâ€™s coal-fired power sector still has many problems, and global warming gases from the country are expected to continue increasing. Chinaâ€™s aim is to use the newest technologies to limit the rate of increase.

Only half the countryâ€™s coal-fired power plants have the emissions control equipment to remove sulfur compounds that cause acid rain, and even power plants with that technology do not always use it. China has not begun regulating some of the emissions that lead to heavy smog in big cities.

Even among Chinaâ€™s newly built plants, not all are modern. Only about 60 percent of the new plants are being built using newer technology that is highly efficient, but more expensive.

With greater efficiency, a power plant burns less coal and emits less carbon dioxide for each unit of electricity it generates. Experts say the least efficient plants in China today convert 27 to 36 percent of the energy in coal into electricity. The most efficient plants achieve an efficiency as high as 44 percent, meaning they can cut global warming emissions by more than a third compared with the weakest plants.

In the United States, the most efficient plants achieve around 40 percent efficiency, because they do not use the highest steam temperatures being adopted in China. The average efficiency of American coal-fired plants is still higher than the average efficiency of Chinese power plants, because China built so many inefficient plants over the past decade. But China is rapidly closing the gap by using some of the worldâ€™s most advanced designs.

After relying until recently on older technology, â€œChina has since become the major world market for advanced coal-fired power plants with high-specification emission control systems,â€ the International Energy Agency said in a report on April 20.

Chinaâ€™s improvements are starting to have an effect on climate models. In its latest annual report last November, the I.E.A. cut its forecast of the annual increase in Chinese emissions of global warming gases, to 3 percent from 3.2 percent, in response to technological gains, particularly in the coal sector, even as the agency raised slightly its forecast for Chinese economic growth. â€œItâ€™s definitely changing the baseline, and thatâ€™s being taken into account,â€ said Jonathan Sinton, a China specialist at the energy agency.

But by continuing to rely heavily on coal, which supplies 80 percent of its electricity, China ensures that it will keep emitting a lot of carbon dioxide; even an efficient coal-fired power plant emits twice the carbon dioxide of a natural gas-fired plant.

Perhaps the biggest question now is how much further China can go beyond the recent steps. In particular, how fast will it move toward power plants that capture their emissions and store them underground or under the seafloor?

That technology could, in theory, create power plants that contribute virtually nothing to global warming. Many countries hope to develop such plants, though progress has been halting; Energy Secretary Chu has promised steps to speed up the technology in the United States.

China has just built a small, experimental facility near Beijing to remove carbon dioxide from power station emissions and use it to provide carbonation for beverages, and the government has a short list of possible locations for a large experiment to capture and store carbon dioxide. But so far, it has no plans to make this a national policy.

China is making other efforts to reduce its global warming emissions. It has doubled its total wind energy capacity in each of the past four years, and is poised to pass the United States as soon as this year as the worldâ€™s largest market for wind power equipment. China is building considerably more nuclear power plants than the rest of the world combined, and these do not emit carbon dioxide after they are built.

But coal remains the cheapest energy source in China by a wide margin. China has the worldâ€™s third-largest coal reserves, after the United States and Russia.

â€œNo matter how much renewable or nuclear is in the mix, coal will remain the dominant power source,â€ said Ashok Bhargava, a China energy expert at the Asian Development Bank in Manila.

Another problem is that China has finally developed the ability to build high-technology power plants only at the end of a national binge of building lower-tech coal-fired plants. Construction is now slowing because of the economic slump.

By adopting â€œultra-supercriticalâ€ technology, which uses extremely hot steam to achieve the highest efficiency, and by building many identical power plants at the same time, China has cut costs dramatically through economies of scale. It now can cost a third less to build an ultra-supercritical power plant in China than to build a less efficient coal-fired plant in the United States."

We know that China can make her own 2,210-kw coal mining machine to efficiently extract coal. We have seen China's Yuhuan-type ultra-supercritical coal-fired plants burn coal at a world "record-breaking efficiency of 45%." The final technology is electricity distribution; China's/"World's first [super-efficient] 1000kv UHV Alternating Current transmission project."

BEIJING -- A spokesman of the State Grid Corporation of China (State Grid) said here Wednesday the country has become the world leader in the development of ultra-high-voltage (UHV) power transmission and [transformer] technology.

Two workers of Huaibei power company inspect the transformer substations in Huaibei, east China's Anhui Province, Jan. 29, 2008. [Xinhua]

In recent years, China has achieved an overall breakthrough in UHV core technology and the localization of UHV equipment, with more than 100 domestic manufacturers and suppliers participating in the manufacturing and supply of UHV equipment, Ma said at the annual General Meeting of the China Business Council for Sustainable Development (CBCSD).

In January 2009, the world's first 1000kv UHV Alternating Current transmission project, known as the Jindongnan-Nanyang-Jingmen UHVAC transmission project, was put into operation. It marks a breakthrough in the technology of long-distance, large-capacity and low-loss UHV power transmission.

The project has been organized and independently innovated by the State Grid, said the company official. So far, the State Grid has formulated 47 national standards and a whole set of specifications for UVH project design, construction, operation and maintenance, he said.

Ma said that the standard voltage of China's UHVAC is recommended as the international standard by the International Electro Technical Commission and the International Council on Large Electric System.

The International Electro Technical Commission has set up an HV Direct Current New Technology Board, with its secretariat based in China. It is the first time that the commission has placed the secretariat of a board in China, according to the State Grid official.

By 2012, the company plans to set up a large coal-electricity base linking together Shanxi and Shaanxi provinces, the Inner Mongolia Autonomous Region, and other economically-challenged western parts of the country, as well as a UHV network for eastern and central load centers.

By 2020, the company will build up a synchronized power grid mainly consisting power grids of northern, eastern and central parts of the country. By then, the country's total transmission capacity of UHV power grid will have reached 300 million kw."

Dapeng Sun, China's first self-built liquefied natural gas carrier, is delivered to its owner in Shanghai. The vessel, which cost US$160 million to build, has a capacity of 147,000 cubic meters, or about 70,000 tons, of LNG. Built by Shanghai-based Hudong-Zhonghua Shipbuilding (Group) Co, the ship will sail on the Australia-Guangdong route to load the clean fuel to south China. (Note: Photo is from Shanghai Daily April 4, 2008)

Dalian: Iranian tanker giant NITC has ordered a landmark series of six LNG ships in China. Just like a decade ago when NITC ordered the first ever VLCCs for export from China, this deal, revealed over the weekend, is the first time an overseas firm has signed for gas ships in the Peopleâ€™s Republic.

"Based on estimates, each tanker has been priced between $200mln to $220mln, meaning that for building six tankers initially demanded by Iran from China, we need $1.2bn in credit," Mohammad Souri, President and CEO of NITC, said Sunday. For NITC these are its first gas ships, and mean that Iran could be exporting gas by ship as early as March 2012.

Chinese media suggest NITC has plumped for Shanghai Waigaoqiao Shipbuilding. SWS has never built LNG ships before. China's only yard versed in this high-tech construction has been Hudong-Zhonghua, also from Shanghai, which has been building a series of six, (including Dapeng Sun, pictured) for a domestic consortium involving Cosco.

Chinese energy majors have signed a series of deals with Iran over the past three years to develop Iranian gas fields. [31/05/10]"

"China has said new sanctions against Iran, to be discussed by the U.N. Security Council, must not hurt 'normal trade'.""The sanctions are not for punishing innocent people and should not harm normal trade."

TEHRAN - Iran has ordered six tankers from China to transport the liquefied natural gas (LNG) it hopes to export from its giant gas reserves, the semi-official Fars news agency reported on Sunday.

The order -- worth $200 million to 220 million per ship -- is a sign that China's economic relations with Iran remain fairly good despite Beijing backing a new draft of U.N. sanctions meant to pressure Tehran over its uranium enrichment.

Mohammad Souri, managing director of the National Iranian Tanker Co., said Iran usually bought South Korean ships but had judged the Chinese offer better value for money.

In another sign of cordial relations, a Tehran city council official said on Sunday that China has granted Iran a 1-billion euro ($1.23 billion) loan for infrastructure investment such as roads, Fars reported.

Unlike Qatar, its neighbour across the Gulf with which it shares the vast South Pars gas field, Iran does not yet produce LNG. The development of Iran's gas industry has been hampered by years of sanctions which have deterred foreign investors.

In a sign of China's growing importance in the OPEC member's energy industry, last year the China National Petroleum Corporation clinched a $4.7 billion deal to develop phase 11 of South Pars, replacing France's Total.

It is also in talks about developing Iran's LNG industry.

As China's economy has boomed in recent years, it has used its financial clout, in the form of loans or investments, to strengthen ties with mineral-rich countries around the world, including Iran, its third-largest crude oil supplier.

China has said new sanctions against Iran, to be discussed by the U.N. Security Council, must not hurt "normal trade".

"The purpose of sanctions is to bring the Iranian side to the negotiating table," China's U.N. Ambassador Li Baodong said shortly after Beijing gave its backing to a draft which the United States and Europe had been pushing for for months.

"The sanctions are not for punishing innocent people and should not harm normal trade.""

We know that China's first "liquefied natural gas" (i.e. LNG) carrier transports natural gas from Australia to China. What happens to natural gas after it arrives in China?

One destination is "Beijing's Super Efficient Trigeneration Plant." The natural-gas plant efficiency is an incredible 58% (e.g. 13% + 45% = 58%); "According to Xinhua, the plant is 13 percent more efficient than the most advanced coal-fired power plant [e.g. 45% for Yuhuan-type ultra-supercritical] in the world."

Clinton with US Special Envoy for Climate Change Todd Stern and GE executives (Getty)

"What we hope is you don't make the same mistake we made, because I don't think either Chinese and the world can afford that," Hillary Clinton said this weekend, referring to the West's dirty industrialization amid talk of working with China on climate change issues. She was speaking at Beijing's Taiyanggong Thermal Power Plant, a one-year-old gas-fired power plant that produces both electricity and steam with half the emissions and a third the water usage of an equivalent Chinese coal-fired plant. Said US Special Envoy on Climate Change Todd Stern, "This is exactly the kind of thing the US and China should do more together."

How trigeneration worksThe Taiyanggong plant, China's first urban gas-fired trigeneration plant, generates 3.2 GWh of power per year and is estimated to cut 1.5 million metric tons of CO2 per year in electricity generation alone. It also means a cut in SO2, NOX, and particulates -- the other terrible stuff that comes out of China's untold numbers of coal-fired power plants.

In this system, natural gas is sent to the gas turbine for power generation. The flue gas is then sent to a heat recovery steam generator to generate steam with a high temperature and pressure. This steam drives the steam turbine to generate even more electrical power.

Meanwhile, the plant's waste steam also provides heating and cooling to Beijing's Taiyanggang neighborhood, an area of 40 square kilometers, making redundant 78 low efficiency boilers.

While a cogeneration plant offers combined heating-and-power (CHP) through the conversion of waste heat -- a technology John Laumer has called "deadly sexy" -- a trigeneration plant also generates chilled water using that heat. Thus it's sometimes referred to as a CHCP, or combined heating-cooling-and-power plant.

According to Xinhua, the plant is 13 percent more efficient than the most advanced coal-fired power plant in the world. Its dramatically more efficient than most Chinese or American coal-fired power plants, where 33% efficiency is the norm. That means 2/3rds of these plants' heat goes to waste.

Owned by Beijing Energy Investment Holding Co. and SP Power Development Co. Ltd., the plant has received credits under the UN's Clean Development Mechanism, the program that pays for clean energy projects in the developing world. Some have criticized the program for its overemphasis on Chinese projects, and its certification program, which sometimes counts dams and other questionable projects as CO2 reducers.

Where are our trigen plants?
The sound economics and ethics of cogeneration and trigeneration are clear, but they are growing only slowly. New York launched its first trigeneration plant last year, but as Forbes.com reports, regulatory hurdles and the complexities of building the plants have kept many stuck in the pipeline.

In the US, a renewed focus on energy efficiency under the Obama administration however could change that, using state-level incentives. The Department of Energy recently released a comprehensive assessment of CHP's potential, "Combined Heat and Power: Effective Energy Solutions for a Sustainable Future," (downloadable pdf file). Among its findings:

If the US adopted high-deployment policies to achieve 20 percent of generation capacity from CHP by 2030, it could save an estimated 5.3 quadrillion Btu (Quads) of fuel annually, the equivalent of nearly half the total energy currently consumed by US households.

Cumulatively through 2030, such policies could also generate $234 billion in new investments and create nearly 1 million new highly-skilled, technical jobs throughout the United States.

CO2 emissions could be reduced by more than 800 million metric tons (MMT) per year, the equivalent of taking more than half of the current passenger vehicles in the US off the road.

In this 20 percent scenario, over 60 percent of the projected increase in CO2 emissions between now and 2030 could be avoided.

Sharing Goals
Clinton's visit was a clear attempt to step away from the finger-pointing over climate and connect the dots between economic and environmental interests in both the US and China. The plant is based on generators and advanced super-critical gas turbines by General Electric, which also services the plant.

Partnerships between US and Chinese companies can be fraught with intellectual property (IP) issues. Consider how until recently, a number of Chinese cars looked suspiciously like US models. But Chinese officials continue to insist that technology transfer be a key part of climate agreements between the West and China. The West will likely remain hesitant until IP protection sees greater advances.

Increasingly though the Chinese are developing their own hi-tech solutions. When I spoke to Ferdinando "Nani" Becalli-Falco, President and CEO of GE International, at the start of last summer's Beijing Olympics, he explained why GE needs to be more "more Chinese than the Chinese": "[The country is] becoming a creative technologist. My mother used to have a German refrigerator, now she has a Chinese one, a Haier. So they've begun to build products that are competitive from a technology point of view and a price point of view."

In the clean energy sector, companies like Suntech are paving the way for home-grown and potentially huge solutions.

In the short term, as Chinese officials talk about shutting down coal plants and Western countries seek common ground with China on climate change, the best proof of the potential for clean energy in China are projects like Taiyanggong."

"Tianjin to have desalinated seawater as domestic water
English.news.cn 2010-06-03 22:03:45

TIANJIN, June 3 (Xinhua) -- North China's Tianjin Municipality will start providing desalinated seawater for home use and drinking this month to ease the city's water shortage, a company official said Thursday.

The first stage of the seawater desalination project, the nation's largest to date, had been completed, said Guo Qigang, general manager of Tianjin Beijiang Power Plant, which is in charge of the project.

It was processing 100,000 tonnes of water a day and the water quality was undergoing tests.

The second stage of the project was expected to be completed by December next year, taking the total desalination volume to 200,000 tonnes a day, or a quarter of the city's daily water consumption, Guo said on a seminar on seawater utilization.

Tianjin has one of the most acute water shortages in China. It has launched several projects to divert water from the Yellow and Luanhe rivers into the city for domestic use, but its per capita quota of water resources stands at just 370 cubic meters, much lower than the internationally-recognized warning level of 1,000 cubic meters per capita.

More than 400 of China's 600 cities are short of water.
Seawater desalination was an effective measure to ease the shortages, Sang Guowei, an academician of the Chinese Academy of Engineering, said at the seminar.

Tianjin Beijiang Power Plant, with total investment of 26 billion yuan (3.82 billion U.S. dollars), has undertaken the trial project of China's recycling economy, which consists of power generation, seawater desalination, sea salt production and waste resource reuse.

I don't believe that it is important whether Canadian oil is being shipped to China or not. For every gallon of Canadian oil that is shipped to the United States, the U.S. will buy one less gallon from Saudi Arabia. Instead, that gallon from Saudi Arabia will be shipped to China.

On the other hand, let's assume that Canada eventually builds a pipeline to its West coast and ships oil to China. For every gallon that Canada ships to China, the U.S. will simply buy an extra gallon from Saudi Arabia and China will buy one less. The point is that it makes no difference whether Canada ships oil to China or not.

Furthermore, Canada is merely one player among many in the energy business. As a consumer, China has the option of choosing the source of energy that it prefers. For example, Australia exports 40 million tonnes of coal to China (see Ship Chartering: Australia plans to boost coal exports to China). China can always import more Australian coal and convert it into oil in one of China's coal-to-liquid (i.e. CTL) plants.